STL’s Bilingual Contracts Course Showcased in China Legal Daily

Visiting Professor Preston Torbert’s innovative course, “Drafting Bilingual Contracts: The Problem of Ambiguity,” was featured prominently in the April 21, 2018 issue of China Legal Daily. An English translation of the article follows.

To Study and in Due Course Practice What One Has Studied, Is This Not a Pleasure?[2]

“Can a Chinese law student improve a contract in English drafted by the most accomplished American lawyers?”

The answer to this question begins with a story from many years ago.

A week after I graduated from Harvard Law School in June, 1974, my mother handed me a new draft lease for a building that my family owned, asking me whether I had any comments on it. I read it carefully and then suggested only one change—a rent escalation clause based on the consumer price index. But after three years of legal education I was unable to make any legal comments on the contract! I was embarrassed and surprised. I had had great teachers of contracts, but they emphasized theory, not practice. I resolved to help law students do better.

To implement this resolution I started teaching at the Peking University School of Transnational Law in 2012. My course, “Drafting Bilingual Contracts: The Problem of Ambiguity,” is based on my experience–several decades of drafting and negotiating Chinese-English bilingual joint venture contracts for American clients. In the 1980s, I formed a China practice group in the Chicago office of Baker & McKenzie that included about ten legal specialists. Working together with my Chinese colleagues over many years, I learned a great deal about the ambiguous nature of the English language and wrote four books on the subject. Therefore, the main theme of the course I have created in Shenzhen is ambiguity, because ambiguity is the major cause of contract litigation and ambiguity, especially in bilingual contracts in international trade and investment. Although ambiguity is ubiquitous, it often is unnoticed. And it causes problems when, during the term of the contract, an unanticipated event occurs and each party carefully examines the language of the contract to determine its rights. Often the language is ambiguous, the parties adopt different self-serving interpretations, and a dispute is born. In the course in Shenzhen, I teach my students how to identify contract ambiguities, how to analyze them, and how to reduce the risk of ambiguity in order to protect a client’s interest. My students acquire three practical legal skills: (1) an understanding of the meticulous attention to detail required in reviewing a contract, (2) a mental checklist of ambiguity issues, and (3) a toolkit for reducing ambiguity.

The exam for the course asks the students to use their understanding, mental checklist, and toolkit to review and comment on an actual contract in English. I have selected “material” (i.e., important) contracts of major companies listed in the United States. The American Securities and Exchange Commission has a database of these contracts and they are available to the public, but only after the parties have deleted any confidential information. In prior years, I have used contracts to which Huawei, Alibaba, Tencent, Google, Microsoft, Motorola, Yahoo, and Goldman Sachs were parties.

The exam instructs each student: “Assume you are an in-house lawyer working at [name of company]. The General Counsel gives you the attached Agreement to review to see whether it should be revised before it is used as the draft for another similar contract in the future.” The exam gives the students three hours to review the contract for ambiguities, comment on them, and suggest changes to protect the company’s interest.

After grading the exams and consulting with the Dean, Phil McConnaughay, I spend two weeks selecting the best student comments and summarizing them in a 20-30 page Summary. Zhang Chenli 张趁利, the Director of Development and Career Services, and I then send the Summary to the General Counsel of the company.

I make clear in the Summary that it “does not constitute a formal legal opinion from me or from Baker McKenzie, the law firm where I spent several decades. It is merely the comments of law students who are not yet members of the bar. Since the students lack an understanding of the company’s business, they look at the contract only from the perspective of the course–searching for and revising ambiguities. Nevertheless, their gratuitous comments can add value for the company.” Since these legal opinions are aimed at actual contracts (such as, contracts of Goldman Sachs and Huawei), in the past three years, Director Zhang Chenli and I have received many favorable responses such as the following from the Legal Departments of the companies:

“We wanted to contact you to let you know how much we appreciate the insights you shared with us from you and your students. [The General Counsel] passed your [Summary] on to our group because we worked on the transaction that ultimately gave rise to the [exam contract]. It is always illuminating to have fresh sets of eyes reviewing our work, and it is clear that you and your students put a lot of thought and effort into reading and thinking about the [exam contract] you used in your class. Thank you for sharing the resulting insights with us. We will definitely keep them in mind.”

“Professor Torbert, thank you for sending us the [Summary], there are valuable comments for our contract drafting and reviewing. I will circulate it internally and let you know if we have questions.”

“I … read the Summary, and found it so impressive! As an in-house counsel mainly working on M&A deals, I deal with M&A contracts and commercial contracts every day… I’ve learned a lot from your Summary, which I believe will absolutely inspire me in my future daily work.”

All substantial contracts—even the best—contain ambiguities because ambiguities, like flaws in computer software programs, are an unavoidable characteristic of the product. To the extent that the drafter can find and eliminate ambiguities or the programmer can find and eliminate flaws, the contract or the software program is better. But a busy in-house legal department usually does not have the resources either to conduct a meticulous contract review itself or to pay outside counsel to do so. In short, my students’ comments can be viewed as similar to a benevolent hacker’s reporting of some minor software flaws to a programmer or perhaps a White Hat community’s “crowd-sourced” reporting.

Ambiguity is the greatest source of contract disputes, but ambiguities are inevitable, so the fewer the ambiguities, the better the contract. The above responses from the Legal Departments show that Chinese law students, with proper training, can acquire unique practical skills developed through many years of practice by me and my colleagues in the China Practice Group in the Baker McKenzie Chicago office.

Therefore, the answer to the question posed at the beginning of this article is “Yes.” The Chinese law students through study and application of these skills can improve the work of the most sophisticated law firms and in-house legal departments. “To study and in due course practice what one has studied, is this not a pleasure?” If I indulge myself, I can say that this is a great achievement of Chinese-American cooperation in legal education.

[1] The translation is of an article that appeared in Chinese in the Fazhiribao (The Legal Daily) newspaper on April 21, 2018.

[2] This quote from The Analects of Confucius refers to the unity of theory and practice.

About the author: Mr. Preston M. Torbert is a well-known American “China law” specialist who for many years served as a partner in Baker McKenzie, one of the world’s largest law firms. He has two doctorates, one in law from Harvard, the other in Chinese history from the University of Chicago and for many years devoted himself to Sino-U.S. trade and investment, especially the research and practice of bilingual legal documents.

Back in 1975, Mr. Torbert visited China for the first time. In the 1980s, he established a Chinese law group in the Chicago office of Baker McKenzie. Of the ten members of the group, all were Chinese except for him; he was the only “foreigner.” In 1981, he helped Baker McKenzie establish a Beijing office. Mr. Torbert teaches as an adjunct professor at the University of Chicago Law School and starting in 2012 was invited to teach at the Peking University School of Transnational Law in Shenzhen. His course “Drafting Bilingual Contracts: The Problem of Ambiguity” is the most popular elective course at the School of Transnational Law.

Mr. Torbert has a good command of nine languages (including Chinese) and has published in China four legal books in Chinese, including “Legal English: The Interpretation of Chinese-English Bilingual legal Documents.” When he is in Shenzhen, he is a loyal subscriber and reader of the Legal Daily.